Microsoft’s anti-virtualization stance: forget DRM, think Apple

The quest for a reason behind Microsoft's prohibition continues. We look at …

This weekend Eric Lai of Computerworld attempted to describe the possible relationship between Vista's DRM and Microsoft's licensing restrictions against virtualization. The view that Microsoft's prohibition stems from fears that users will circumvent DRM isn't new, but the article comes at an opportune time: Microsoft came within an inch of reversing their position last week, but then backed off. The time is ripe for more speculation as to just why Microsoft says "no" to the virtualization of those two OSes, yet allows virtualization of other editions of Vista. I think Lai's contribution to the discussion is interesting, but I'm not convinced that DRM has much to do with the issue. In fact, I'm fairly certain there's a bigger concern at Redmond, and it has nothing to do with DRM, and everything to do with the long-term fate of Windows. More on that in a minute.

Lai says that Microsoft might have got cold feet over virtualization because it can be used to circumvent DRM. Recall that Vista provides end-to-end "protection" for DRMed content, from the files themselves all the way to encrypted pathways to output devices. A virtual machine (VM) could ultimately allow for uninhibited copying since the entire machine and user environment is copied and virtualized to such an extent that the protected media paths and their adjacent parts would all "look" like the original authorized machines to DRMed content. You could thus make identical copies of the content by copying the entire virtualized environment.

There are three major problems with this thesis. The first is the most obvious, which is that trading multi-gigabyte virtual machines with friends so that they can access, say, video tied to a specific machine is a little onerous. "Pirates" aren't idiots. They're not going to be swapping VMs when they can get unencrypted content online, anyway. Swapping any amount of secondary material (VMs, keys, etc.) is more work than USENET or BitTorrent, that's for sure.

Reason number two is just as obvious: since when do "pirates" care about what a EULA says? Remember that the prohibition against the virtualization of Home Basic and Premium is a prohibition only in words: there is no technical measure preventing Joe Pirate from virtualizing them. Thirdly, even if there were such a mechanism, Joe Pirate would just "pirate" Vista Ultimate or Business, both of which allow virtualization in the license. A EULA can't stop piracy any more than it can stop malware.

So, to briefly recap, the prohibition is only a prohibition to "law obeying citizens," and the payoff for circumventing DRM in this manner is unimpressive. It's hard to take this seriously as a "threat," even if we imagine a bloodthirsty entertainment industry lurking in the shadows.

The Apple of my eye

If it's not the DRM, then what is it? The most simple explanation is to be found in accounting for why Microsoft would make what is clearly an arbitrary decision to allow the virtualization of Vista Ultimate and Business while disallowing it for Home Basic and Premium. The only truly significant differences between the two groups as relates their core features for would-be virtualization users is pricing: Home Basic is $199; Home Premium, $239; Business, $299; Vista Ultimate, $399. As you can see, the two "lower cost" SKUs happen to be the two that are prohibited.

As you may know, so-called original equipment manufacturers have the right to purchase these full versions of the OS at greatly reduced prices. In such a scenario, Home Basic becomes $99, while Home Premium is $119. Big OEMs who do big volume sales see prices far lower than these, but getting them to comment on how much they pay for Windows is nearly impossible. Despite this, we've come to believe that big OEMs are seeing Windows licenses in the range of $50 to $80 for Basic to Premium, generally speaking. This is the so-called Windows Tax. Keep in mind that Microsoft has long since changed its ways and now gives the same deal to all OEMs, and it cannot use its strength in the Windows market to punish some OEMs and reward others. If Joe's Computers can move X number of units for Microsoft, Microsoft needs to make Joe's the same deal it made Fred's.

Now keep in mind that Apple is, technically, an OEM.

Now imagine Apple running adverts on the TV that say: with a Mac, you can get the best of both worlds by adding Windows Vista to your Mac for $99. "Get a Mac, then add a PC for $99!"

And imagine that users don't need Boot Camp to use Vista but can legally fire up a VM at any moment. Apple and their "geniuses" would, in fact, happily help you get Vista set up in a VM so the "switch" could be that much more convenient.

All of this paints a picture in which Apple could use OEM pricing to offer Windows for its Macs at greatly reduced prices and running in a VM. The latter is absolutely crucial; telling users that they need to reboot into their Windows OS isn't nearly as sexy as, say, Coherence in Parallels. If you've never seen Coherence, it's quite amazing. You don't need to run Windows apps in a VM window of Vista. Instead, the apps appear to run in OS X itself, and the environment is (mostly) hidden away. VMWare also has similar technology, dubbed Unity.

Microsoft has built its empire on the backs of Windows and Microsoft Office. Windows is the real workhorse, as it's the foundation of the PC market. Microsoft, I suspect, is terrified of a world in which standard, Joe-Consumer Windows can be virtualized and made to play second fiddle to Mac OS X, or even (say) Ubuntu Linux. No longer does Joe Consumer view the computing world as Windows versus all. Instead it begins to look like Windows versus Windows + alternative OSes. This not only opens consumer choice but also increases the chances of users realizing that they might be able to get their needs met without a Windows OS taking the lead. For the longest time, Microsoft and its advocates have been able to say: "with a PC, you get the most choice of software and peripherals." Now a case could be made that the most choice is to be found on a Mac or Linux box virtualizing Windows on the side. The big impediment to this world is the cost of Windows, but an OEM price on the low-end of Windows could eliminate that impediment quickly.

Until Steve Jobs allows the virtualization of the Mac OS, which will happen precisely never, Microsoft's commodity cash cow could find itself virtualized into the corner.

Ken Fisher
Ken is the founder & Editor-in-Chief of Ars Technica. A veteran of the IT industry and a scholar of antiquity, Ken studies the emergence of intellectual property regimes and their effects on culture and innovation. Emailken@arstechnica.com//Twitter@kenfisher